The word “transmission” is defined as the passing of a property /asset by operation of law. In the case of the death of a shareholder, the process of transfer of ownership / right of shares to the legal heirs or successors is called as Transmission of shares. If a person dies and leaves a Will, it is referred to as testamentary succession. However, if a deceased person did not leave a will, it is called intestate succession. In the case of testamentary succession, the legal heirs must turn to the competent courts to obtain the probate of the will. In the case of intestate succession, a certificate of inheritance must be applied for at the court in which the deceased had his or her permanent residence which is referred to as the Succession Certificate.
Difference between Transfer & Transmission of shares
The fundamental question that raises in the field of shares is the difference between the transfer of shares and the transmission of shares.
|Transfer of Shares||Transmission of Shares|
|Refers to the transfer of ownership of shares from one person to another.||Refers to the transfer of ownership of shares due to the death or incapacity of the current shareholder.|
|Can be made at any time and frequently.||Occurs due to the death or incapacity of the shareholder.|
|It is a voluntary transfer.||It is an involuntary transfer governed by the law of inheritance.|
|Requires completion of a stock transfer form and payment of any applicable stamp duty.||Requires a court order in form of Succession Certificate / Probate of Will / Letter of Administration or a Surviving member certificate / legal heir certificate depending upon case to case.|
|Can be made by an individual or a legal entity.||Is usually made by the legal heirs or executors of the deceased shareholder or by a court-appointed guardian for a shareholder who is incapable of acting.|
|The transferor must hold a valid title for the shares.||The acquirer must prove his relationship to the deceased or incapacitated shareholder.|
|The transfer is subject to compliance with the provisions of the Companies Act and SEBI regulations.||The transfer is subject to compliance with the provisions of the Companies Act and the SEBI regulations and the laws of succession / inheritance as applicable.|
Probate of Will:
When a person dies after leaving a will, it is called testamentary succession. In this case the executor of the Will needs to obtain a probate of the Will from the court for the transfer of the deceased’s property / assets.
A Succession Certificate is issued to the successor of a deceased person who has not made a will, to establish the rights of the successor. Succession Certificate gives the holder of the certificate the authority to dispose of the debts and securities of the deceased. It is issued by the district judge of the competent court.
LOA (Letter of Administration):
An official court document issued to give power of attorney to a person to administer the entire estate of a deceased person. It is issued when a person dies at death (without leaving a will). The letter of administration gives the person the right to administer the estate of a deceased person. If there is no executor, the beneficiary can apply to the court for a letter of administration.
Legal Heir Certificate or Surviving Member Certificate:
In the event of the death of a family member, his legal heirs might require an authentic document to determine who are the legal heirs or surviving members to the deceased in the form of a Legal Heir Certificate or Surviving Member Certificate.
You might think that the process of transmission is overwhelming and never-ending. Simply contact our Legal Experts at GLC Wealth and we will assist you throughout the transfer process
How GLC Wealth will help you in Transmission of shares:
- Experience legal professional across India will first understand your matter in detail including the jurisdictions & laws governing your case
- Understand the Family Tree & the inheritance laws governing the transfer of shares
- Determine which documents is required for transmission of shares amongst Probate of Will, Succession Certificate, LOA or Legal Heir Certificate depending upon value of shares & availability of will
- Communicate with companies / RTA to obtain relevant letters & procedure for transmission of shares
- Compiling a complete list of investments & details required for obtaining a wholesome court order relevant to the case
- Preparing documents for transmission of shares once the court order / is obtained